Vikas finally lands a job of his choice at his dream company, with a salary that is enough not only to enjoy a decent life, but also to save a portion of it for the future. However, saving decisions don’t come easily as investment is still not a common norm in India. He tries to consult everyone he can, and all he gets is a common response of investing in FDs. Although he is familiar with the term, he is still confused about what it means, its benefits, and which banks offer the best interest rates. However, he need not worry anymore as this article will cover every aspect of Fixed Deposit and help him find the right banks/NBFC for investment.
What is a Fixed Deposit?
In the simplest of terms, a Fixed Deposit is a certain amount of money you invest in a bank or Non-Banking Financial Company (NBFC) at a fixed interest rate for a certain amount of time. One earns this fixed interest over a period of time or at maturity. A stable interest rate, capital protection, flexibility in choosing tenure options, guaranteed returns, and easy accessibility make it one of the most popular and safest investment options available.
Top Banks providing Best FD Rates in India
After knowing about FDs, Vikas now needs to know about some of the top banks that give the best interest rates. So here is a small list of the same:
| Banks | Highest FD rate (% p.a.) | 1-yr FD rate (% p.a.) | 3-yrs FD rate (% p.a.) | 5-yrs FD rate (% p.a.) | Additional interest rate for senior citizens(% p.a.) |
| North East Small Finance Bank | 9.00 | 7.00 | 8.75 | 8.00 | 0.50 |
| Unity Small Finance Bank | 8.60 | 7.25 | 8.15 | 8.15 | 0.50 |
| Suryoday Small Finance Bank | 8.60 | 7.90 | 8.40 | 8.60 | 0.50 |
| Utkarsh Small Finance Bank | 8.25 | 6.25 | 8.25 | 7.75 | 0.50 |
- North East Small Finance Bank: General citizen is entitled to interest of 3.5%-9% for the investment tenure ranging from 7 days to 10 years. A person can start from a minimum amount of 1000. It also allows for premature withdrawal when needed.
- Unity Small Finance Bank: This bank tends to offer interest rates of 4.50-8.60% p.a. to the general public on tenure from 7 days to 5 years with a minimum amount of 1000. It also allows for premature withdrawal.
- Suryoday Small Finance Bank: Offers interest rates of 4.00-8.60% p.a. to the general public, tenure of the investment ranging from 7 days to 10 years. Additionally, it provides an interest rate of 8.60% p.a. for the general public and 9.10% p.a. for senior citizen depositors which has a tenure of 5 years. Premature withdrawal is not allowed in Tax Saver FDs.
- Utkarsh Small Finance Bank: Offers interest rates of 4.00-8.25% p.a. The interest rate is 7.75% p.a. for the general public and 8.25% p.a. for senior citizen depositors which has tenures of 5 years. For those FDs bearing a duration below 181 days, interest calculation is done on maturity on simple interest basis.
Also read: New RBI Guidelines for Personal Loan Approvals in 2025 – Everything You Need to Know
NBFCs that provide Best Interest Rates
| NBFC Organizations | 1 Yr Interest Rate | 3 Yr Interest Rate | 5 Yr Interest Rate |
| ICICI Home Finance | 7.00-7.25% | 7.40-7.65% | 7.50-7.75% |
| Bajaj Finance Ltd. | 7.60% | 7.70-8.00% | 8.30% |
| HDFC Ltd. | 7.40% | 7.00% | 7.00% |
| LIC Housing Ltd. | 7.25% | 7.75% | 7.75% |
While ICICI Home Finance and HDFC Ltd.’s tenure range is from 12 months to 120 months, Bajaj Finance and LIC Housing’s tenure range is from 12 months to 60 months. NBFCs also provide senior citizens with an additional rate of interest of 0.25% on fixed deposit investments.
Banks Vs. NBFCs
Getting a little insight into the various types of fixed deposits, along with top banks and NBFCs giving the best fixed deposits, but now the question that Vikas has is: What will be better for him, Banks or NBFCs?
| BANKS | NBFCs |
| Lower interest rates | Higher interest rates compared to banks |
| Stringent eligibility criteria, documentation, and credit score | More relaxed criteria and a quicker approval process |
| Can secure a more significant amount of loan with a strong financial record | Amount is smaller, but are more flexible regarding tenure and repayment |
| Highly regulated and transparent with customers | More flexibility that might lead to higher risks |
Conclusion
Banks and NBFCs can provide a variety of options and facilities to the investor, depending on what suits them the best. Choosing the right bank/NBFC with the best interest rate can make the investment journey more rewarding and less risky.
Written by Roshni Mohinani
